Employment law and employment contracts

Liechtenstein employment law is liberal and allows companies considerable flexibility. Employment contracts can be individually-configured in accordance with legal requirements. In certain fields employers and employees must at least comply with the generally binding collective agreements.

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Public employment law contains employee protection provisions. Deviation from these mandatory minimum regulations, such as for example working and rest hours, is permitted only if this benefits the employee. The individual employment contract may be established between the employer and the employee within the constraints of these regulations.

The individual employment contract

Individual employment contracts may be established orally or in writing. A written employment contract is, however, urgently recommended in every case. If the contract is established only orally the Employer is may be obliged to hand a written document over to the employee that sets out the most important terms and conditions of employment. This document must contain at least the following information:

the personal details, registered office or domicile of the employer

the date of commencement of employment (for fixed-term contracts the duration of the contract)

the daily or weekly working and rest periods

Information about the workplace

Information about work performance

the official or functional title and rank

Duration of leisure and holidays

notice periods

if applicable, collective or standard employment contracts

wages (money and / or barter, supplements, gratuities, expenses)

Collective employment agreements

Collective employment agreements exist in many sectors. In Liechtenstein these are known as “Gesamtarbeitsverträge” (GAV). They contain the general provisions for the respective sector, such as working hours, holiday entitlement, notice periods as well as minimum wages etc. Minimum wages are redefined each year in a wage and protocol agreement.

The government may declare collective employment agreements to be generally binding. These will then be applicable to the entire sector and to all employers, both Liechtenstein and non-domestic employers. The foundation SAVE was founded by the social partners to monitor and implement collective employment agreements that have been declared generally binding. The Central Parity Commission (Zentrale Paritätische Kommission –”ZPK”, German only) has been appointed by the foundation to execute and monitor this. The Central Parity Commission is tasked with monitoring and enforcing adherence and implementation of the provisions of the collective employment agreement.

Generally binding collective employment agreements currently exist in the following sectors:

Collective employment agreements are negotiated between the social partners. On the part of employees, this means the Liechtenstein Employees’ Association (Liechtensteinische ArbeitnehmerInnenverband –”LANV”, German only) and on the part of employers this means the Chamber of Commerce (Wirtschaftskammer – “WKL”, German only), the Chamber of Industry and Commerce (Industrie- und Handelskammer – “LIHK”) as well as the establishment PostAuto Liechtenstein Anstalt. If a collective employment agreement has not been declared generally binding, it applies only to companies that have signed the collective employment agreement.

Collective employment agreements that are not generally binding currently exist in the following sectors:

Standard employment contracts

The government can issue standard employment contracts. This means that the government regulates the employment relationship between employee and employer of a particular industry. The provisions of the standard employment contracts apply directly to the employment relationships assigned, unless otherwise agreed in an individual employment contract. Standard employment contracts currently exist for employees in home-service and agriculture.

Termination of the employment relationship

It is essentially the case that an indefinite employment relationship may be terminated by the employer as well as by the employer at any time without specifying grounds. The periods of notice need to be observed, however. During the trial period, the employment relationship may be dissolved at any time, subject to a seven-day period of notice effective from the end of a working week. During the trial period there is no protection against dismissal in the event of illness, accident or pregnancy. The trial period amounts to the first month of an employment relationship, whereby the trial period may be extended to a maximum of three months by means of an employment contract. If the employer falls ill or suffers an accident during the trial period, the trial period may be extended by a further three months.

Unless otherwise stipulated in the employment contract, the following notice periods apply once the trial period has been completed:

During the 1st year of service: 1 month as at the end of a month

During the 2nd up to and including the 9th year of service: 2 months as at the end of a month

From the 10th year of service onwards: 3 months as at the end of a month

Adherence to these notice periods is not necessary if the employee or employer has good cause to terminate the employment relationship without notice. Good cause exists if the party issuing the notice of termination can no longer reasonably be expected to continue the employment relationship. If both the employee as well as the employer agree, the employment relationship may also be dissolved with immediate effect by means of a so-called severance contract.